Thoughts, ideas and insights directly from the ANA

March 01, 2010

A Fight on the Value of Television Advertising

By Bill Duggan

A fight broke out at the recent ANA TV & Everything Video Forum. The “contestants” were David Cooperstein, Vice President, Research Director at Forrester Research and David Poltrack, Chief Research Officer at CBS.

David Cooperstein had just finished presenting research from a joint ANA/Forrester survey that asked national advertisers about their attitudes towards television and video advertising. Highlights of that presentation included advertiser responses that spending in television was down and that the medium had become less effective. But the research also pointed to opportunities in areas including branded entertainment, addressable TV, and online video. ANA members can get the full survey report here.

In the Q&A session that followed, David Poltrack commented, “The frustration is just great. Essentially all morning long we heard about all the great things we're doing with advertisers to create new and exciting ways to use television (comment: those presentations were from Subway, Kraft, Cisco, and Pepsi), and then we get this report that is totally contradictory and inconsistent with what we know.”

ANA tries very hard to program events with a fair and balanced perspective. So allow me to provide some observations about television.

Television viewing is at an all time high. The average U.S. viewer watches 4 hours and 49 minutes of television per day—up 20 percent from a decade ago, according to Nielsen.

Television provides advertisers the opportunity to build mass reach quickly (arguably better than any other medium). Super Bowl XLIV (this year’s game!) was the most watched television program of all-time with 106.5 million average viewers.

However, the abundance of television viewing options has greatly fragmented the audience. American Idol was the top rated program of the 2008/2009 broadcast season with an average household rating of 15.1. Ten years ago, ER was the top rated program of the 1998/1999 broadcast season with an average household rating of 17.8. Twenty years ago, The Cosby Show was the top ranked program of the 1988/1989 broadcast season with an average household rating of 25.3. Marketers can target audiences more narrowly given all the options, but audiences are generally smaller than ever before.

Consumers are increasingly multitasking when the television is on. A generation ago we’d simply watch Happy Days or Dallas. But today, kids are on the computer and other mobile devices, which are distractions from viewing, although there has been some recent buzz in the industry that some social media can complement viewing. Remember that Nielsen reports “opportunity to see” and not engagement or true viewership of individual commercials.

Sixty-two percent of the marketers in our survey believe that television is becoming less effective. Only seven percent stated that television is becoming more effective while the remainder believe that it’s no more or less effective. So advertisers, and a lot of them, have the perception that television’s effectiveness is declining.

And then there’s the issue of spending on television—which was part of the “David versus David” debate. Per MAGNA, total television ad spending has declined from $55.6 billion in 2008 to $48 billion in 2009—that’s almost a 14 percent drop. In the defense of television, however, other most other media had even steeper declines in 2009 so television share of spend actually increased. In 2010, television spending is expected to rebound somewhat to $50.5 billion but that’s still well below 2008 levels.

Meanwhile, opportunities for television indentified in our survey include:

Eighty percent of advertisers agree that branded entertainment will play much more of a role in television advertising.

Seventy-eight percent of advertisers are interested in addressable television to target consumers more precisely.

Forty-six percent of advertisers plan to spend more on ads in online video/online television shows in 2010.

Plus, television is increasingly available via the web “on-demand” and on mobile devices providing consumers more options to watch.

Television is alive and well and the current times are both exciting and challenging for the medium. This is a blog so your comments are not only welcome but appreciated. David and David—anyone else—please jump in!